This invention relates generally to profitability, and, more specifically to methods and systems used to enhance profitability on accounts, for example, loan accounts.
There are certain fixed and variable expenses for a lender doing business that are unavoidable as a cost of doing business. In the simplest of known systems, the expenses are simply calculated as a percentage of the transaction. However, most fixed expenses are constant no matter the size of the transaction. A potential customer could be discouraged from seeking a business opportunity with a lender who calculates fixed expenses as a percentage of the transaction value. Lenders and customers both realize that there are expenses incurred in conducting business. For large transactions, customers realize that a lender is going to incur additional expenses in both an approval cycle and in a maintenance cycle through the life of the transaction. How the lender passes the expenses on to the customer certainly affects the customer in, for example, up front expenses and, incurred interest and fees, but the passing of expenses also affects the lender. For example, the impact to the lender is whether the fixed income from a transaction is greater than the fixed expense of the transaction, which affects profitability.
Another impact to profitability are the activities and associated workload engaged in by employees of lenders in researching, underwriting, closing and servicing a transaction. Some of these expenses are variable depending on the size of the deal. Further, some of the activities are greatly reduced, eliminated or magnified, depending on the size and/or structuring of the deal.